Bloomberg News

Cheyne Capital Starts Funds for Credit, Real-Estate Debt

May 11, 2012

Cheyne Capital Management (UK) LLP, the money manager founded by former Morgan Stanley bankers Jonathan Lourie and Stuart Fiertz in 1999, is raising two funds that will invest in corporate debt and European real estate-backed bonds.

The Cheyne Global Credit Fund and the Cheyne European Real Estate Bond Fund will comply with UCITS IV rules, meaning Undertakings for Collective Investment in Transferable Securities, according to an e-mailed statement from Cheyne today. The directive is a regulated European fund format.

The credit fund will focus on corporate debt in North America and Europe, as the firm “believes credit spreads are currently pricing in too much downside given the very robust fundamentals of most corporate balance sheets,” according to the statement. London-based Cheyne’s corporate credit team oversees $1.3 billion.

The extra yield investors demand over government debt to buy non-financial European corporate bonds has risen to 147 basis points from 111 basis points a year ago, according to a Bank of America Merrill Lynch index. A basis point is 0.01 percentage point.

Real Estate

Cheyne, which currently manages $1.3 billion of real estate bonds and loans, is also seeking opportunities as banks retreat from Europe’s 1.4 trillion-euro ($1.8 trillion) property debt market, according to the statement.

The two funds will allow investors to redeem investments weekly. Cheyne said it is starting the funds in response to demand from investors.

The firm’s other UCITS strategy includes the Cheyne Convertibles Absolute Return Fund, which earned 13.8 percent since its inception in December 2009 and 4.3 percent so far this year.

UCITS funds place restrictions on leverage, offer investors transparency of holdings similar to that of mutual funds and allow clients to withdraw money in as little as a day.

Cheyne Capital manages more than $6.3 billion, including $4.2 billion in hedge funds, according to its website.

To contact the reporter on this story: Patricia Kuo in London at pkuo2@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net


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